Cadastral vs Commercial vs Bank Appraisal in Mexico

When you buy, sell or pay taxes on a property in Mexico, it's easy to mix up terms that sound alike but mean very different things: cadastral value (valor catastral), commercial appraisal, bank appraisal and tax appraisal. All of them are valuations of the same property, but each is issued by a different authority or professional, for a specific purpose, which is why the figures almost never match. In this guide we explain what each one is, who prepares it, why they differ from one another and, above all, which one you need depending on the transaction you're about to carry out.

Overview: why there are so many values

The same apartment can have, at the same time, a relatively low cadastral value, a much higher commercial appraisal and a bank appraisal somewhere in between. This isn't a mistake: each valuation answers a different question. The cadastre (catastro) asks, "How much property tax (predial) should this property pay?"; the market asks, "What can it be sold for?"; and the bank asks, "What is it worth as collateral for a loan?"

Understanding these differences helps you avoid surprises: for example, finding out that the bank will lend you less than you expected because its appraisal came in below the agreed price, or that the property acquisition tax is calculated on a different value than the one you paid. If you want a broader look at the types of valuation and their costs, check out our guide on real estate appraisals, types and costs.

Cadastral value: the basis of the predial

The cadastral value (valor catastral) is the value that the municipal or local authority (the catastro) assigns to each parcel in its territory. It is primarily a tax-related value: it serves as the basis for calculating the property tax (predial) and often comes into play in other procedures with the local government as well.

This value is determined from tables and unit values for land and construction that each state or municipality approves, taking into account factors such as location, lot size, square meters of construction and the property's use. Because it relies on general tables rather than an individual market inspection, in many cases it tends to come in below the actual sale price, although this varies by locality and by how recently each cadastre has updated its tables.

Commercial appraisal: for buying and selling

A commercial appraisal estimates a property's market value, that is, the price at which it could reasonably be sold under normal conditions. It is prepared by a licensed appraiser (perito valuador) or an appraisal firm, through a physical inspection and a comparison with similar properties that have sold or are listed in the same area.

It is the most useful appraisal when you want to put your home on the market, negotiate a purchase or simply find out what your assets are worth today. It takes into account the property's condition, improvements, the area's appreciation, nearby services and current supply and demand. Because it is based on the real market, it is usually higher than the cadastral value. For a rough initial estimate before hiring an appraiser, you can use our free value calculator.

Bank appraisal: for the mortgage loan

A bank appraisal is a type of commercial appraisal, but one prepared by an appraiser authorized or registered by the institution that will grant the loan (a bank, a Sofom or an agency such as INFONAVIT or Fovissste). Its goal is to determine what the property is worth as collateral, since the bank decides how much it is willing to lend based on that value.

Although it starts from the same market logic as the commercial appraisal, banks tend to apply more conservative criteria, because their priority is to protect the recovery of the loan. That's why it's not unusual for the bank appraisal to come in slightly below the price agreed between buyer and seller. When that happens, the loan is calculated on the lower of the appraisal and the sale price, and the buyer has to cover the difference with their down payment or savings.

Tax appraisal: for taxes and notary procedures

The tax appraisal (avalúo fiscal) is the one used to calculate certain taxes tied to the transfer of a property, such as the Impuesto Sobre Adquisición de Inmuebles (ISAI, the property acquisition tax) and, in some cases, as a reference for the Impuesto Sobre la Renta (ISR, income tax) on a sale. This appraisal is issued by an appraiser authorized by the relevant tax authority and follows official guidelines for tax purposes.

In practice, when you sign the deed (escrituras) before a notary public (notario público), the transaction value (what was actually paid), the tax appraisal and the cadastral value are usually compared, and taxes are determined using whichever one applies under local regulations. That's why it's a good idea to have the notary and an appraiser explain, in your specific case, which figure your taxes and fees will be calculated on, since rules and rates vary from state to state.

Side-by-side comparison

The trends in the table are generalizations: in practice, the order of the figures can vary depending on the locality, how old the cadastral tables are and market conditions.

Why they differ from one another

The main reason is that each valuation pursues a different goal and uses different methodologies. These are the factors that most influence the discrepancies:

• Purpose: the cadastre seeks a stable tax base; the market seeks the real price; the bank seeks to protect its collateral.
• Method: the cadastral value relies on unit-value tables; the commercial and bank appraisals rely on inspection and market comparables.
• Updates: cadastral tables can go years without adjustment, while a commercial appraisal reflects the market at that moment.
• Risk criteria: banks apply prudential haircuts or discounts that an open commercial appraisal doesn't necessarily factor in.

Which one do I need for my transaction?

To avoid overspending or coming up short, first identify what you're going to do and then choose the right valuation:

• I'm going to pay the predial or complete a local procedure: the cadastral value governs, and your municipality has already assigned it.
• I'm going to sell or buy and want to know the fair price: you need a commercial appraisal.
• I'm going to apply for a mortgage loan: the bank or institution will require its own bank appraisal from an appraiser on its list.
• I'm going to sign the deed and calculate taxes: the tax appraisal will come into play, coordinated with the notary.

If you're still exploring and haven't decided which property you want, you can start by reviewing options in our property search and, once you have a candidate, estimate its value with our value calculator before hiring any formal appraisal.

Frequently asked questions

Should the cadastral value and the commercial value be the same?

Not necessarily. They serve different purposes and use different methods, so they usually produce different figures. The cadastral value tends to come in below the commercial value, although this varies by locality and by how up to date the cadastre's tables are.

Can I use the commercial appraisal for my loan?

Generally not. Banks and housing agencies require an appraisal prepared by an appraiser from their own registry or authorized by them. Always confirm with your institution which appraisal they accept before hiring one.

What happens if the bank appraisal is lower than the sale price?

The loan is usually calculated on the lower of the appraisal and the agreed price, so you would have to cover the difference with your down payment or savings. It's wise to plan for this before committing to a deposit.

How often does the cadastral value change?

It depends on each municipality or state. Some update their value tables fairly regularly and others leave them unchanged for several years, so it's best to check your tax bill or ask the local cadastre to find out the current value.